US sees momentum in Asia-Pacific trade talks

DALLAS - Talks on a free trade agreement between the United States and eight countries in the fast-growing Asia-Pacific region made good progress over the past week, but tough issues remain, the top U.S. trade negotiator on the deal said on Wednesday.

"While we have work ahead, we see a clear path forward toward conclusion of most of the more than 20 chapters of the agreement," Barbara Weisel, assistant U.S. trade representative for Southeast Asia and the Pacific, told reporters at the end of the 12th round of talks on the proposed pact.

The nine countries negotiating the Trans-Pacific Partnership (TPP) agreement will meet again in early July in San Diego and "hope to use that round to make a major step forward toward conclusion of the agreement," Weisel said.

The TPP is a key element of President Barack Obama's so-called pivot toward Asia to help propel U.S. economic growth. It is seen as an important tool to keep the United States anchored in the region as China's economic might grows.

The eight other TPP countries - Australia, New Zealand, Chile, Peru, Singapore, Malaysia, Vietnam and Brunei - comprise the fourth-largest U.S. market for goods and services exports. Japan, Canada and Mexico asked six months ago to join the talks, but current members have not made a decision on that yet.

Negotiators face a host of difficult issues, ranging from Vietnam's interest in better access to the U.S. textile and clothing market to U.S. demands for tough new rules on "state-owned enterprises" to make sure they don't have an unfair trade advantage in the region over private companies.

U.S. Trade Representative Ron Kirk told a textile industry group on Tuesday that Vietnam was fiercely resisting U.S. demands for a "yarn forward" rule, which would require that all the materials that go into clothing originate and be assembled in a TPP country to qualify for duty-free treatment.

"They don't want to do this stuff. I don't blame them. If you were Vietnam, you'd negotiate the same way," Kirk said, adding the United States would just have to show the same "resolve" in pushing its position.

While the United States has reduced or eliminated tariffs on many goods, its duties on clothing remain high.

Nearly 70 percent of all the duties collected by the United States on imports from TPP countries come from clothing, according to the TPP Apparel Coalition, which represents U.S. retailers and clothing importers.

Weisel said negotiators were pushing for a "comprehensive" agreement liberalizing trade in all products, but would not say if that meant all tariffs and other trade barriers would be eliminated under the pact.

The United States restricts imports of dairy and sugar and other TPP countries have similar measures to protect their own sensitive sectors. Weisel said negotiators have begun to dig into the tough "market access" issues but the hardest decisions would probably be left for the end.

U.S. Trade Representative Ron Kirk and top trade officials from the other eight TPP countries will meet in early June in Kazan, Russia on the sidelines of the annual Asia Pacific Economic Cooperation (APEC) trade ministers meeting.

Weisel, who resisted predicting how soon countries could reach a final agreement, said the nine TPP ministers would "discuss progress achieved to date and agree on a plan forward."

The top trade officials will also discuss Japan, Canada and Mexico's applications to join the talks. (Reporting by Marice Richter; Additional reporting and writing by Doug Palmer; Editing by Vicki Allen and Cynthia Osterman)